The milestone is significant because it is the price point at which extraction oil is profitable for most drilling companies, depending on the method they use.

Oil prices have been at near record-lows for years, bottoming out at $26.21 in February 2016 ascheaper US shale oil flooded the market. However, oil got a boost starting later that year when OPEC and its allies, including Russia, voted to slash production in order to increase demand. The cartel reiterated these cuts in November.

"The recent rally elevated prices into the self declared sweet spot for US producers," RBC Capital Markets analyst Mike Tran told Business Insider. "Drill baby drill will be the mantra, meaning that an onslaught of US production growth may serve as a headwind for prices through the balance of this year."

Low prices have forced many major companies to roll back oilfield investments, the Wall Street Journal reports. Anadarko and Chevron both plan to reduce spending on new wells as well as continued operation of existing sites.

The US Energy Information Association estimates that fossil fuel production will hit an all-time high this year as well as in 2019. The government agency specifically cites fracking — a cheap but environmentally harmful method of extracting gas and oil from shale — as the catalyst for the uptick.

CROSSROADS, N.M. (AP) -- Carl Johnson and son Justin are third- and fourth-generation ranchers who for decades have battled oilfield companies that left a patchwork of barren earth where the men graze cattle in the high plains of New Mexico. Blunt and profane, they stroll across a 1 1/2-acre patch of sandy soil - lifeless, save for a scattering of stunted weeds.

Five years ago, a broken pipe soaked the land with as much as 420,000 gallons of oilfield wastewater - a salty and potentially toxic drilling byproduct that can quickly turn fertile land into a dead zone. The leaked brine killed every sprig of grama and bluestem grasses and shinnery shrubs it touched.

For the Johnsons, the spill is among dozens that have taken a heavy toll: a landscape pockmarked with spots where livestock can no longer graze, legal fees running into the tens of thousands and worries about the safety of the area's underground aquifer.

"If we lose our water, that ruins our ranch," Justin Johnson said. "That's the end of the story."

Their plight illustrates a largely overlooked side effect of oil and gas production that has worsened with the past decade's drilling boom: spills of wastewater that foul the land, kill wildlife and threaten freshwater supplies.

An Associated Press analysis of data from leading oil- and gas-producing states found more than 180 million gallons of wastewater spilled from 2009 to 2014 in incidents involving ruptured pipes, overflowing storage tanks and other mishaps or even deliberate dumping. There were some 21,651 individual spills. And these numbers are incomplete because many releases go unreported.

Though oil spills tend to get more attention, wastewater spills can be more damaging. And in seven of the 11 states the AP examined, the amount of wastewater released was at least twice that of oil discharged.

Spilled oil, however unsightly, over time is absorbed by minerals in the soil or degraded by microbes. Not so with the wastewater - also known as brine, produced water or saltwater. Unless thoroughly cleansed, a costly and time-consuming process, salt-saturated land dries up. Trees die. Crops cannot take root.

"Oil spills may look bad, but we know how to clean them up and ... return the land to a productive state," said Kerry Sublette, a University of Tulsa environmental engineer and specialist in treating the despoiled landscapes. "Brine spills are much more difficult."

In addition to the extreme salinity, the fluids often contain heavy metals such as arsenic and mercury, plus radioactivity. Even smaller discharges affecting an acre or two gradually add up for landowners - "death by a thousand bee stings," said Don Shriber of Farmington, New Mexico, a cattleman who wrangled with an oil company over damage.

For animals, the results can be fatal. Ranchers, including Melvin Reed of Shidler, Oklahoma, said they have lost cattle that lapped up the liquids or ate tainted grass.

"They get real thin. It messes them up," Reed said. "Sometimes you just have to shoot them."

The AP obtained data from regulatory agencies in Texas, North Dakota, California, Alaska, Colorado, New Mexico, Oklahoma, Wyoming, Kansas, Utah and Montana - states that account for more than 90 percent of the nation's onshore oil production. Officials in ninth-ranking oil producer Louisiana and second-ranking gas producer Pennsylvania said they could not provide comprehensive spill data.

The spill total increased each year, along with oil and gas production. In 2009, there were 2,470 reported spills in the 11 states; by 2014, the total was 4,643. The amount of wastewater spilled doubled from 21.1 million gallons in 2009 to 43 million in 2013 before dipping to 37.6 million last year.

The extent of land or water contamination is unknown; state and federal regulators make no such assessments. Texas, the nation's biggest oil and gas producer, had the most incidents, 4,783, and the highest volume spilled, 62 million gallons.

Industry groups and regulators said much of the waste is recovered during cleanup operations or contained by berms near wells. Still, they acknowledged a certain amount soaks into the ground and can flow into waterways.

"You're going to have spills in an industrial society," said Katie Brown, spokeswoman for Energy In Depth, a research and education arm of the Independent Petroleum Association of America. "But there are programs in place to reduce them."

Wastewater spills have dogged the oil industry from its earliest days more than a century ago, borne witness by barren sites from the Great Plains to the Pacific. A notorious symbol is the "Texon scar," where brine from a well drilled in 1923 near that tiny West Texas town created a desolate 2,000-acre swath dotted with dead mesquite trees. Efforts to restore the land continue to this day, said range conservationist Joe Petersen.

Concentrated brine, much saltier than seawater, exists naturally in rock formations thousands of feet underground, a remnant of prehistoric oceans. When oil and gas are pumped to the surface, the water comes too, along with fluids and chemicals injected to crack open rock - the process known as hydraulic fracturing. Production of methane gas from coal deposits also generates wastewater, but it is less salty and harmful.

The spills usually occur as oil and gas are channeled to metal tanks for separation from the wastewater, and the water is delivered to a disposal site - usually an injection well that pumps it back underground. Pipelines, tank trucks and pits are potential weak points.

Accidents range from the mundane to the freakish; in 2010, a storage tank near Ardmore, Oklahoma, overflowed after a snake slithered into a panel box and blew a fuse. Most spills are caused by equipment malfunction or human error, according to state reports reviewed by the AP.

Though no full accounting of damage exists, the scope is sketched out in a sampling of incidents:

- In North Dakota, a spill of nearly 1 million gallons in 2006 caused a massive die-off of fish, turtles and plants in the Yellowstone River and a tributary. Cleanup costs approached $2 million. Two larger spills since then scoured vegetation along an almost 2-mile stretch and fouled a creek and a river.

- Wastewater from unlined pits seeped beneath a 6,000-acre cotton and nut farm near Bakersfield, California, and contaminated groundwater. Oil giant Aera Energy was ordered in 2009 to pay $9 million to grower Fred Starrh, who had to remove 2,000 acres from production.

- Brine leaks exceeding 40 million gallons over decades on the Fort Peck Indian Reservation in Montana polluted a river, private wells and the municipal water system in Poplar. "It was undrinkable," said resident Donna Whitmer. "If you shook it up, it'd look all orange." Under a 2012 settlement with the U.S. Environmental Protection Agency, oil companies paid $320,000 for new water wells and other improvements. Drinking water tainted with oilfield brine can cause high blood pressure, dehydration and other health risks, EPA spokeswoman Sarah Teschner said.

- In Fort Stockton, Texas, officials in February accused oil company Bugington Energy of illegally dumping 3 million gallons of wastewater in pastures. Paul Weatherby, general manager of the Middle Pecos Groundwater Conservation District, said he fears contamination of the area's groundwater table. The district levied a $130,000 fine but the company hasn't paid, contending the district overstepped its authority.

- A pipeline joint failure caused flooding on Don Stoker's ranch near Snyder, Texas, in November 2012 and turned his hackberry shade trees into skeletons. Vacuum trucks sucked up some saltwater and the oil company paid damages, but Stoker said his operation was in turmoil. "I had to stay out there three days and watch them while they were getting the saltwater out, to make sure they didn't totally destroy the whole area."

Government agencies acknowledge having a limited view of the accidents, which often happen in remote places and, unlike oil spills, don't produce dramatic images of birds flailing in black goo and tourist beaches fouled. Regulators rely on private operators to notify them, and it's not always required. For example, Oklahoma exempts reporting of most spills of less than 10 barrels, or 420 gallons.

The loudest whistleblowers are often property owners, who must allow drilling access to their land if they don't own the mineral rights.

"Most ranchers are very attached to the land," said Jeff Henry, president of the Osage County Cattlemen's Association in Oklahoma. "It's where we derive our income, raise our families. It's who we are."

A big reason why there are so many spills is the sheer volume of wastewater extracted: about 10 barrels for every barrel of oil, according to an organization of state ground water agencies, or more than 840 billion gallons a year.

Sometimes, the exact cause is never determined. The Johnsons have yet to learn why an underground line ruptured in at least two places on the state-owned land they lease for ranching. A salty, oily odor wafted heavily on the breeze when Justin Johnson reached the site in October 2010.

"I was just totally and thoroughly disgusted," he said.

New Mexico Salt Water Disposal Co. acknowledged responsibility. No fines were levied because the leak was accidental. Vice President Rory McGinn blamed practices and materials the company no longer uses, saying in an interview that "an enormous amount of money" has gone into upgrades.

The company said much the same in 2005 after earlier spills, telling the state in a letter obtained through a records request it had spent nearly $250,000 on higher-grade pipe, tanks and valves and "our objective and goal is to be 100 percent maintenance and environmentally safe in our operation."

The company has had a dozen spills since 2003, said Larry Behrens of the New Mexico Department of Energy, Minerals and Natural Resources.

Despite such incidents, relatively few farmers and ranchers complain publicly. Some get royalty checks for wells on their property. Others don't want to be seen as opposing an industry that is the economic backbone of their communities.

"If they treat us right, we're all friends of oil," said Mike Artz, a grower in North Dakota's Bottineau County who lost a five-acre barley crop in 2013 after a saltwater pipeline rupture. "But right now, it's just a horse running without the bridle."

Oil and gas developers said they have everything to gain from stopping spills, which cost them money for cleanup and soil restoration.

Sara Hughes, spokeswoman for pipeline operator Kinder Morgan, said her company has lowered water injection pressure and installed additional leak-detection devices on its lines since its spill on Stoker's land.

"We are committed to public safety, protection of the environment and operation of our facilities in compliance with all applicable rules and regulations," Hughes said.

In North Dakota, where the spills increased at a higher rate than the well count during the boom years of 2009-'14, pipelines near waterways must have leak prevention devices but not those elsewhere; critics said that shows the oil industry's political clout. Lynn Helms, director of the North Dakota Department of Mineral Resources, said more devices would be costly and wouldn't necessarily catch small leaks.

Tessa Sandstrom, of the North Dakota Petroleum Council, said the industry is cooperating with scientists studying prevention and land restoration. When spills do happen, she said, most are cleaned up within a year.

But Bottineau County grain farmer Daryl Peterson said it took years of prodding before regulators ordered an oil company to dig up 300 truckloads of tainted soil on his property and replace it. The soil is still salty, he said.

Sublette, the University of Tulsa engineer, said soil excavation and replacement is unreliable because some operators "bring in the nastiest stuff they can find." He recommends extensive flushing with fresh water to remove salts from the zone where plants take root, then rebuilding the soil with nurturing additives. Even done correctly, it can take years to get plants growing again.

Similar methods were used on the Johnsons' pastures, but father and son said the land has not come back to life.

"It will never, ever be like it was," Justin Johnson said, giving a bleached-white stone a desultory kick. "It will never fully recover."

In a major reversal, the Obama administration says it will not allow oil drilling in the Atlantic Ocean.

Interior Secretary Sally Jewell made the announcement Tuesday on Twitter, declaring that the administration's next five-year offshore drilling plan "protects the Atlantic for future generations."

The announcement reverses a proposal made last year in which the administration floated a plan that would have opened up a broad swath of the Atlantic Coast to drilling. The January 2015 proposal would have opened up sites more than 50 miles off Virginia, North and South Carolina and Georgia to oil drilling no earlier than 2021.

The Interior Department said the latest decision responds to strong local opposition and conflicts with competing commercial and military ocean uses.

Oil production is not only triggering earthquakes in Texas today, it was rattling the state as early as the 1920s.

Researchers at the University of Texas looked back at the history of the state's tremors and found a long list that were likely the result of the state's oil boom, even if the reasons varied over time.

Most of the state's current seismic activity is probably or "almost certainly" the result of human activity, but man-made quakes occurred as early as 1925, the study found.

While Texas hasn't had the shakes as badly as neighboring Oklahoma, the number of noticeable earthquakes to hit the state has gone up from about two a year to about a dozen. The US Geological Survey recently added the Dallas-Fort Worth area to its seismic hazard map, warning that the risk of a damaging earthquake in a populated area has gone up significantly.

Scientists have linked the increase in seismicity to the disposal of the salty wastewater that comes up from oil wells, which is usually injected deep underground. And the boom in hydraulic fracturing operations, which allow drillers to reach previously-inaccessible pockets of oil, has meant a huge increase in the amount of that water being pumped deep below the surface.

In a statement accompanying the study, Cliff Frolich, associate director of the Institute of Geophysics at UT-Austin, said the findings should put to rest the debate over whether humans are causing quakes in Texas — but some of the early quakes were the result of activities far different than what's happening now.

The earliest human-induced quakes occurred when drillers would rush to drain an oil field, leading to underground cave-ins that set off seismographs; between the 1940s and 1970s, oil companies pumped water underground to drive oil toward the surface, making it easier to pump. That contributed to quakes as well, he said.

The results were published this week in the scientific journal Seismological Research Letters. The authors were critical of Texas state regulators, whom they said were "slow to acknowledge" the connection between oil operations and drilling.

The Texas Railroad Commission, which oversees the industry, called the study "arbitrary" and "subjective," according to Reuters, and said the agency had also taken steps to reduce injection volumes.

Regulators in Oklahoma and Kansas also have been trying to stop the shaking by telling oil companies to rein in the volume and depth of their injection operations. But Frolich said there's no easy solution to the problem.

"I think we were all looking for what I call the silver bullet, supposing we can find out what kinds of practices were causing the induced earthquakes, to advise companies or regulators," he said. "But that silver bullet isn't here."

The Qatari head of the Organization of Petroleum Exporting Countries (OPEC) has said previously that new investment in the sector requires barrel prices to rise above $65.

OPEC has made no strides in accelerating price growth over the past two months.

Two separate pushes to reduce oil production in an effort to force prices upwards have been rejected by Saudi Arabia, who fears Iran’s rise if it does not join the proposed freezes.

Russia, the 13-member bloc’s rival, said OPEC has “practically stopped existing as a united organization” before the proposed freezes failed to get approved for a second time on 2 June.

Iranian officials have made it clear that they will not participate in production halts as the government works to restart the country’s economic engine. International sanctions lifted earlier this year had locked Iran out of the global oil trade for years.

Under the present circumstances, the government and the Oil Ministry have not issued any policy or plan to the National Iranian Oil Co. (NIOC) towards halting the increase in the production and exports of oil," Rokneddin Javadi, who heads the state-run National Iranian Oil Co. (NIOC), said last month.

Recent reports suggest the Shiite-majority country is on the verge of achieving pre-sanction export levels, with its shipments reaching European and Asian nations.

Among stock market investors there is often no more welcome news than the news of an acquisition or buyout of a company the investor owns. Those buyouts usually come with a hefty premium attached – sometimes as much as 30 percent or more of the pre-acquisition stock price. But why is this the case? Why are acquiring firms willing to pay substantially more for a stock than investors were just days earlier in most cases? The answer is synergy values.

Synergies result from additional cost savings and revenue generation that come from combining two firms into one larger firm. Synergies give economic rationale to M&A deals. Yet despite that, there have been very few M&A deals proposed during the current oil crisis, which suggests that energy companies could be missing an opportunity. To be clear of course, not all M&A deals work well for investors – but it’s unrealistic to believe that there are no attractive opportunities that could make energy investors on both sides of a transaction better off.

For instance, offshore drilling companies which are combining might be able to share salesforce costs. Certainly only one CEO and corporate HQ will be needed for the combined firm. Beyond cost savings though, there are often cross-selling opportunities that arise from mergers. For instance, two industrial manufacturing companies that make related products used in the energy supply chain might be able to tap one another’s customer bases after a merger. Despite these opportunities, outside of the failed BHI/HAL merger attempt, there has been precious little M&A activity. That lack of activity may be due to dual pressures in the industry; larger firms lacking the balance sheet flexibility to do deals and smaller firms lacking the understanding of M&A benefits.

The concept of synergies applies to firms of all sizes, from publicly traded goliaths to small privately-owned companies. While there are roughly 5,000 publicly traded firms in the U.S. today, there are hundreds of thousands of small and medium-sized privately owned firms. These small firms often enter into M&A deals as well, and unlike larger publicly traded firms, small firms often fail to account for synergy values. This is a missed opportunity that may derail many smaller firms from considering otherwise attractive deals. The reality is that M&A deals for small firms are complex enough as it is, and there is no reason for small firms to miss any opportunities unnecessarily.

While there are small investment banking firms that help middle market companies with M&A transactions, synergies may or may not be included in any given IB-assisted transaction. Again, that’s a missed opportunity.

Synergy values have to be examined carefully. In many cases, publicly traded synergy values can be overly optimistic. In a few cases though, an acquiring company may have been acting opportunistically, thus short-changing existing shareholders. To determine which situation is more likely, various forecasting techniques should be used. Probably the most accurate and most defensible technique for doing this is regression forecasting.

Regression analysis is a statistical technique that uses a set of existing data points to assign importance weightings to various facets of a question. For instance, when trying to determine the effect of an increase in interest rates on oil prices, regression analysis would determine the impact that a change in interest rates has, but it might also take into account the effect that that consumer confidence, industrial production, and gas prices have on oil prices. In other words, regression analysis allows one to determine the effect of an interest rate hike on oil prices after accounting for all other observable factors that would impact employment.

This same concept can be applied to valuation work for firms. Regression forecasting can be used to determine the price that one would expect a company to be acquired for after accounting for characteristics of the target firm such as sales growth, profitability, assets, intangibles, and the industry the target and acquiring company operate in. Synergy values could also be included in this list.

There are very few oil crises comparable to the current one. Valuations on natural resources firms are more depressed than they have been in decades. Small firms that are looking to grow should not waste the opportunity.

Ben Van Beurden, Chief Executive Officer of Royal Dutch Shell has laid out an ambitious plan to overtake ExxonMobil as the number one oil company in the world.

Prior to the 1990s, Shell was the leader in total shareholder returns, however, its rivals went on a deal-making spree to gain the lead, while Shell shied away from making any acquisitions. Now, Mr. Beurden believes that Shell will be able to regain its lost glory post the acquisition of the BG group.

“I am determined to get us to that number one place,” Mr. Beurden said after outlining the company’s long-term strategy in London. “I want to create a world class investment case for Shell and our shareholders,” reports Bloomberg.

Shell, with a market capitalization of $216.6 billion, has a lot of catching up to do if it wants to surpass Exxon’s market capitalization of $379.5 billion.

Investors favor Exxon and give it a premium valuation if Price/Earnings, Price/Book or a few other metrics are considered. The reason for higher valuation is the confidence that Exxon is in a better position to tide itself over the current downturn in oil prices, and the fact that it is a better-managed company than Shell.

Shell’s gross and operating margins, return on equity, and assets to cash flow are way below that of Exxon. Though Shell has narrowed the gap for total shareholder returns, Exxon still has an upper hand.

After the purchase of BG, the total debt of Shell has increased to $81 billion, whereas Exxon with $43 billion of debt has options left on the table to borrow if needed.

Shell plans to increase its free cashflow per share, improve its returns, and run the company conservatively. In order to do so, Shell has capped annual investments at $30 billion until 2020, and it has left options open to reduce spending below its lower target range of $25 billion in case crude price hovers close to the current levels of $50 per barrel or drops below it.

It plans to slow down investments in the liquefied natural gas business as well.

Mr. Beurden has laid out an ambitious target to increase the return on capital employed to 10 percent at oil price of $60 per barrel by the end of this decade. This would be a quantum jump for the company, because from 2013 to 2015, Shell managed an average 8 percent return on capital when oil prices were ruling at $90 per barrel.

If Shell manages to achieve this target, its free cashflow will increase to between $20 and $25 billion in another four years against an average free cashflow of $12 billion achieved in the last three years.

Shell, which has operations in more than 70 countries, wants to sell its oil and gas operations in 10 countries. It also plans to offload 10 percent of its production by 2018, as part of its $30 billion asset sale strategy to concentrate on its operations in Brazil, Australia, and the United States.

“Everybody really liked the focus on the cap on capex and also the reduced emphasis on investments in LNG because they’ve made a big investment already by buying BG,” said Iain Reid, an analyst at Macquarie Capital Ltd. in London. “They’ve got a good chance” of surpassing Exxon “if they can change the business in the way they outlined last week,” reports Bloomberg.

The company highlights its medium-term priorities as the deepwater projects in Brazil and the Gulf of Mexico and its chemicals division in the U.S. and China. For the long-term, the company is targeting shale oil and gas production in Argentina and North America along with its alternative energy units of solar, biofuels, and hydrogen, reports Reuters.

The investors will watch the level of execution of Shell because its year-to-date total return was negative 3.2 percent, reports Reuters. In Brazil, where a large part of BG group’s assets are in a partnership with the state-run Petrobras, they might run into trouble due to various corruption and bribery charges. The recent political upheaval will only delay the path to normalcy.

Though Shell might not overtake Exxon in the next few years, its plans will benefit its shareholders. Meanwhile, Exxon will respond to the competition and take necessary steps to maintain its leadership position. At the end of it, it looks like this competition between the two oil majors will ultimately benefit the shareholders.

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before.

A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.

Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year.

For its part, OPEC put out a more dire assessment of its own finances, putting its losses last year at $438 billion, much higher than the $349 billion estimated by the EIA. That came even though overall exports climbed by an average of 400,000 barrels per day, or a 1.7 percent increase, largely because of production gains in Iraq and Saudi Arabia. The plunging revenue led to OPEC members to post a current account deficit of $99.6 billion, the first deficit since 1998. That compared to the 2014 surplus of $238.1 billion.

The largest losses came from Saudi Arabia, which saw revenues plunge nearly in half from $247 billion to just $130 billion last year. Of course, those losses merely reflect Saudi Arabia’s importance as the group’s largest oil producer and one of the largest producers in the world. The revenues that Riyadh earns from exporting oil accounts for one-third of total OPEC earnings.

Obviously, whether or not OPEC sees a rebound in oil revenues depends almost entirely on what happens with crude oil prices, something largely out of the group’s control given that it no longer wants to cooperate on production limits.

So what about crude oil prices? Oil is in a state of limbo right now, having rallied more than 80 percent to $50 per barrel in recent weeks from its lows in February. Following the “Brexit” result, crude oil prices crashed amid broader global financial turmoil. Barring lasting economic upheaval from the UK’s decision to leave Europe, the plunge in prices could be fleeting. The markets will turn back to a look at the fundamentals, although the fundamentals don’t exactly offer a clearer picture of what to expect.

U.S. oil production continues to decline after a brief pause earlier this month. Last week output fell by another 39,000 barrels per day according to weekly EIA estimates, dipping to 8.677 million barrels per day. New projects coming online in the Gulf of Mexico will add 500,000 barrels per day to the U.S. total this year and next, offsetting much of the expected losses in U.S. shale, but the trajectory for the industry outside of the Gulf of Mexico is still down.

OPEC is expected to keep production more or less flat – in fact, output has declined in several member countries because of unexpected disruptions (Iraq, Libya, Nigeria, Venezuela). Some output could come back from those countries, but nothing major is expected.

All told, the markets are still heading towards a supply/demand balance later this year. The IEA, in its June Oil Market Report, sharply lowered its projected global supply surplus for the first half of 2016. Earlier this year the Paris-based energy agency expected the world to be producing 1.5 mb/d in excess of demand for the first half of the year, but this month it cut that figure to 0.8 mb/d, meaning that the markets are substantially tighter than previously thought.

As a result, the IEA sees the oil market moving into balance in the second half of the year (i.e., the very near future). It even sees global oil inventories falling slightly in the third quarter before rising a bit in the fourth.

So while the speed with which oil prices rise is highly uncertain, the “direction of travel seems to be clear,” the IEA concluded, suggesting that oil prices may rise and fall from day-to-day or week-to-week, but prices should trend in an upward direction.

That means OPEC revenues should begin to rebound next year after two miserable years of low oil prices.

Few expected oil prices to crash below $30 per barrel earlier this year, but that is just what they did. Now that oil is back up near $50 per barrel, the worst is over…right?

Not everyone thinks so. Over at Bloomberg View, A. Gary Shilling is making a headline-grabbing prediction: that oil will not only fall from today’s levels, but will fall to between $10 and $20 per barrel.

Many in the energy world would roll their eyes at such a prediction, and it could be way off base. But a year ago when oil prices rose to $60 per barrel at the beginning of the summer of 2015, everyone also thought the worst was over. Companies began adding rigs back to oil fields, hoping to capitalize on a rebound in prices. But crude began crashing again at the end of the summer, culminating in a deep plunge below $30 per barrel in January and February of this year. Very few people saw that coming.

Now, most analysts and oil companies, although more cautious than a year ago, again think that the worst is over. A. Gary Shilling disagrees.

He says that the run up in prices over the past few months was due to temporary supply outages in Canada and Nigeria, not based on lasting fundamentals. And the fundamentals are weak. Iran is back, and aims to double production to 6 million barrels per day by 2020. Libya could bring production back. And Saudi Arabia and Russia continue to produce at elevated levels.

Meanwhile, shale producers have become more efficient and successfully lowered breakeven costs. Indebted companies will continue to produce in an effort to pay back creditors.

On the demand side, China’s economy is slowing. The West is becoming more energy efficient, needing less oil and gas for their economies.

And crucially, oil inventories are still at record levels, forcing more oil to be stored at sea.

All of that means that another price crash is coming…which could have bad economic consequences. Shilling is sticking with his bet that crude falls to between $10 and $20 per barrel. “An oil price drop to below $20 per barrel would be a shock reminiscent of the dotcom collapse in the late 1990s and the subprime mortgage debacle that produced the 2008 financial crisis -- both of which triggered recessions,” Shilling wrote.

To be sure, Shilling’s prediction is not the consensus view. But given that the consensus view was also wrong last year ahead of price crash, Shilling’s prediction should not be ruled out.

Yasuní is also a UNESCO site, since in addition to its unparalleled biodiversity, indigenous tribes also call the area home.

About 40 minutes into the new movie Deepwater Horizon, there is a scene in which crew member Jimmy Harrell is suddenly called into the dining area on the floating drilling platform of the same name. “Mr. Jimmy,” played by Kurt Russell, was the offshore installation manager (essentially the crew boss) on the vessel, and he’d been summoned to receive a special award for the rig’s excellent safety record.

In fact, the Deepwater rig had gone an extraordinary seven years without a single accident serious enough to halt operations. The rig, owned by the Switzerland-based Transocean Ltd., and its veteran crew were some of the best in the business. (BP, the world’s sixth largest oil company at the time, was leasing the rig, a bit the way a rich sportsman might a charter fishing boat and crew.) Just months earlier, BP and the Deepwater team had broken the record for deepest well ever completed. Yet, even as Harrell was being handed his award, high-pressure oil and gas were threatening to surge up the pipe from the sea floor. Despite all their experience and advanced technology, the crew members didn’t spot the signs of trouble and, once the blowout started, didn’t act quickly enough to contain it or save the rig.

Like all Hollywood versions of actual events, Deepwater Horizon takes a few liberties with the facts. But that scene accurately captures the central paradox of most large man-made disasters: How could such well-trained experts make decisions that, in retrospect, appear so deeply flawed? Why didn’t they see the disaster coming or stop it in time? The film paints a gripping picture of a technological catastrophe, and it showcases some genuine heroism on the part of several crew members. But to answer the question of how the disaster happened in the first place, we need to dig a little deeper.

The Dutch pilot-psychologist Sidney Dekker, one of the pioneers in studying large technological breakdowns, has written that the true cause of most disasters is not so much the initial accident “but the failure to identify the accident early in its birth.” The blowout of BP’s Macondo Prospect well was a case study in how a series of small mistakes and misjudgments, when not caught in time, can snowball into catastrophe.

The movie places the blame squarely on the BP executives who helped direct the drilling operations. John Malkovich, playing Don Vidrine, BP’s “company man” on the rig, fairly drips malice as he pushes the crew to cut corners. In a gumbo-thick Louisiana drawl, he berates the Transocean men for being “nervous as cats.” The reality is more complex: BP consistently made some decisions that favored speed over safety, and the company had a reputation for being particularly hard-driving. But the Transocean crew was also involved in the dubious decision-making. And the federal regulators who supervised drilling in the Gulf of Mexico signed off on their plans at every stage.

The reality is that both BP and Transocean had grown dangerously overconfident and were pushing too close to the edge. Perhaps overly impressed by the team’s good safety record, federal regulators routinely rubber-stamped the BP/Transocean proposals. Moreover, despite claims to the contrary, none of the drilling companies in the Gulf had a workable scheme to cope with a massive oil spill. The entire industry had succumbed to risk creep: Over the decades, drillers gradually moved into deeper waters and sunk wells that involved much greater internal pressures and hazards. The technologies and regulations originally developed for shallow waters were updated in response, but not to a degree commensurate with the growing risks. So, even as drillers were getting more proficient, disaster was becoming more, not less, likely.

The Transocean crew, the BP executives, the federal regulators—none of these were stupid people. BP may have had incentives to push its drilling teams hard, but even the greediest executive knows there’s no upside to a catastrophe that kills people, causes massive ecological damage, and costs the company tens of billions of dollars. Malkovich’s scenery chewing notwithstanding, BP’s company man Vidrine certainly didn’t expect that his decisions that day would lead to him to be nearly incinerated by midnight. There has to be a better explanation for why intelligent people sometimes make such terrible decisions.

The reality is that both BP and Transocean had grown dangerously overconfident and were pushing too close to the edge.

And there is. After the loss of the space shuttle Challenger in 1986, sociologist Diane Vaughan began a long investigation into the accident. Her findings would challenge many of our easy assumptions about how disasters occur. We like to think that accidents happen because bad people knowingly and carelessly let them happen. Vaughan discovered something more troubling: that even organizations staffed by smart, seemingly moral people can slowly slide into dangerous and unethical behavior.

Vaughan, an expert in corporate malfeasance, wanted to know how NASA officials made the decision to launch the Challenger despite a serious last-minute safety concern. Very cold weather was forecast for launch day, and some engineers worried that the low temperatures might worsen a long-standing problem: The shuttle’s solid-fuel booster rockets had a tendency to leak small jets of hot gas during takeoff. The engineers urged a delay. NASA decided to launch anyway. The standard view of the accident holds that NASA brass overruled the nervous engineers out of concerns that allowing yet another launch delay would hurt NASA’s image with the public and Congress. From this view, the managers knowingly rolled the dice, bending the safety rules in order to stay on schedule.

Vaughan spent nine years researching the question and determined just the opposite. In her monumental book, The Challenger Launch Decision, Vaughan demonstrates that NASA officials rigorously followed their own safety guidelines.

“Managers were, in fact, quite moral and rule abiding as they calculated risk,” she writes. And yet they were flat wrong. “Following rules, doing their jobs,” she concludes, “they made a disastrous decision.” The managers weren’t “amoral calculators,” Vaughan says. Instead, they were fundamentally deluded about the risks posed by the leaky boosters. What’s more, over the years they had systematicallydeluded themselves, through a process she calls the “normalization of deviance.”

Here’s how the normalization of deviance works: Early in the shuttle program, the appearance of small leaks from the booster rockets’ rubber seals was an unexpected and alarming event. NASA assigned a working group, which dutifully studied the issue and determined the leaks would be manageable as long as they didn’t exceed a certain threshold. “They redefined evidence that deviated from an acceptable standard so that it became the standard,” Vaughan writes. Sure enough, small booster-seal leaks were soon seen as routine during shuttle launches. The problem had been normalized. But as shuttle missions continued, the leaks kept getting bigger.

Each time, NASA repeated the process, again determining that the seal failures were acceptable as long as it didn’t exceed certain, ever higher, thresholds. NASA had crept right to the edge of what would cause a mission failure, all the while convinced that it was operating safely. The fact that the shuttles kept flying reinforced its false sense of security. Then came something NASA hadn’t anticipated: a launch day so cold that it made the rubber seals hard and brittle. The huge resulting leak burned a hole in the shuttle’s external fuel tank.

Vaughan’s normalization of deviance theory had a big influence on the growing branch of management studies dedicated to preventing disasters. Business and engineering schools started teaching the concept. (Vaughan herself now teaches at Columbia University.) Vaughan and other researchers argue that most high-risk industries are prone to normalizing deviance. We’ve all seen this, even in businesses that don’t involve life-and-death decisions: Managers focus on positive data about their operations and tune out small signs of trouble, safety margins get shaved in the name of efficiency, and small deviations from procedural rules are tolerated. But disaster researchers have also developed strategies to help counteract the tendency: tools to help managers be more aware of “weak signals” hinting at trouble, for example, and policies that empower whistleblowers. Companies that follow these and related safety strategies are known as high-reliability organizations—a concept with which BP and Transocean executives should have been deeply familiar.

But the evidence shows that the Deepwater Horizon rig was anything but a high-reliability organization. The movie realistically captures some of this dysfunction. In one scene, we see that the computer used by the rig’s chief electronics technician (played by Mark Wahlberg) is often on the fritz. In another, we learn that an office smoke detector is broken. In fact, many alarm systems on the rig were deliberately “inhibited” in order to prevent false alarms from waking up the crew. On the sea floor, a crucial structure of pipes and valves known as the blowout preventer was poorly maintained (and probably not robust enough in the first place). The blowout preventer was supposed to be the last-ditch defense against high-pressure gas and oil bursting out of the well. It failed utterly.

In designing the structures that would stabilize the pipe and prevent leaks below the sea floor, BP repeatedly opted for the quickest, rather than the most secure, approaches. Though some choices were debated, there’s little sign that the drillers saw any of these decisions as necessarily or blatantly dangerous. (And the regulators certainly didn’t object.) Collectively, though, those aggressive choices nudged the whole operation toward higher risk. BP and Transocean had been working this way for a while. When the wells didn’t fail, the drillers—just like those NASA officials—saw that as a vindication of their methods. Even as their wells were getting more dangerous, they grew more confident and complacent. Researchers who study disasters tell us that a long period without an accident can be a big risk factor in itself: Workers learn to expect safe operation as the norm and can’t even conceive of a devastating failure. In such a situation, workers and managers with the most experience are often the last to recognize when risks are getting out of control.

BP repeatedly opted for the quickest, rather than the most secure, approaches.

After every big disaster we naturally assume some reckless decision by a manager or a massive equipment breakdown must have been the cause. In the words of accident investigator Dekker, we look for “bad people, bad decisions, broken parts.” But in studying large industrial failures (including the BP spill), Dekker came to a very different conclusion about what causes such problems.

Large accidents are more often the result of dozens of tiny contributing factors: misguided assumptions on the part of workers and managers; small, subtly flawed decisions; routine mechanical or digital glitches. Individually, none of these seem particularly noteworthy to the people on the front line—just another day on the job. It’s only after the accident that we see how this particular row of dominoes toppled. What Dekker, Vaughan, and others conclude is that large accidents are primarily the result of particular workplace cultures. In Vaughan’s words, “Mistake, mishap, and disaster are socially organized and systematically produced by social structures.”

This new social science of disaster helps explain why the people involved never seem to see the accident coming. The people working in these cultures don’t think they are being reckless; they don’t recognize all the ways they’ve normalized deviance and let risks creep up.

When the disaster finally strikes, they are as stunned as anyone. These findings also show why disasters are so hard to predict: According to Dekker, “Accidents can happen without anything breaking, without anybody erring, without anybody violating the rules they consider relevant.” The disaster, in other words, is not a violation of the daily routine, but a product of it. Some disaster researchers call these sorts of incidents“normal accidents” or “organizational accidents” to stress the way they emerge from the normal operation of the organization.

BP’s Macondo Prospect blowout was a textbook case of an organizational accident. One scene in the movie shows the crew conducting two critical pressure tests to check the well’s integrity. The first test produced a confusing and worrisome result. So they ran a second test, using a different pipe, and got the result they wanted. (Forensic analysis later hinted that the pipe used in the second test may have been clogged.) The first test must have been wrong, they concluded. Everything was fine. The team had succumbed to the normalization of deviance, setting aside data that didn’t conform to their expectations and relying on information that did.

The movie presents the discussion over the test results as a showdown between BP’s oleaginous Vidrine, pushing to ignore the bad test, and Transocean’s stalwart Harrell, urging caution. In reality, the confusion over the test results was shared, and the decision to move ahead despite ambiguous data was apparently not unusual. Of course, it’s hard to fault the filmmakers for amping up the venality of the BP execs onscreen. Movies need villains (and BP is hardly in a position to expect sympathetic treatment). But if we come away from the movie believing that disasters such as the Gulf spill are caused primarily by flamboyantly greedy and reckless executives, we are learning the wrong message. The kinds of decisions that lead to disasters are rarely telegraphed by malevolent executives twirling their mustaches. More often, they appear just like any other decision in a busy workday.

The behavior of the Deepwater Horizon crew also indicated that none of them was particularly alarmed that work was proceeding despite the worrisome test. Over the next few hours, the crew overlooked several signs that pressure was growing in the well. When the explosive surge of gas and oil finally reached the drilling rig, Harrell was off taking a shower. The blowout caught the rest of the crew off guard as well. It took the crew on the bridge more than a minute to sound the general alarm and much longer to hit the disconnect button that would separate the rig from the well. By then it was too late. This doesn’t mean the crew members were bad at their jobs—it means they were human. In any complex business the expectation of normal operation runs deep. The same workplace culture that gradually normalizes risk-taking also makes it hard for workers to expect trouble. In many disasters, the front-line workers struggle even to comprehend what is happening; the unfolding events fall completely outside their mental models.

To say that the Gulf oil spill was an organizational accident—something that grew organically out of the culture of the drilling platform—doesn’t mean BP wasn’t responsible. It was BP’s decision to attempt extraordinarily deep and hazardous drilling operations. And BP would reap enormous profits from a successful well. So the company deserves to pay every penny of the more than $60 billion in fines and settlements it has been charged with. Moreover, companies that operate in very hazardous fields have a heightened responsibility to understand modern thinking about how workplace cultures can incubate disasters.

The various strategies that make up the concept of the high-reliability organization are not obscure or impossible to implement. It is hard to imagine a work environment more in need of those principles than an oil platform. An analysis by University of California–Berkeley’s Center for Catastrophic Risk Management concluded: “This disaster was preventable if existing progressive guidelines and practices been followed.” Instead, BP and Transocean doubled down on their aggressive style, convinced that their past successes were proof of their skill and invulnerability. In the words of the Berkeley group, “They forgot to be afraid.”

So, by all means, BP deserves to be excoriated. And the Deepwater Horizon movie misses few opportunities on that front. (As one critic wrote, if “you need a corporate stooge who helped destroy the Gulf of Mexico to come off as absolutely evil, yes, you will want to hire John Malkovich.”) But if we think that we can prevent future accidents simply by pointing fingers at the people who caused the last one and exonerating ourselves as less corrupt, we are fooling ourselves. Preventing disasters requires a special kind of daily vigilance that needs to be actively taught and constantly reinforced. Only by admitting that, yes, it could happen to us too, can we take the steps to make disaster less likely.

The Dakota Access pipeline operator chose the day of the US presidential electionto announce that the final phase of its controversial construction project will begin in two weeks – marking a bold escalation in its response to the Native American protests.

Energy Transfer Partners, the company overseeing the North Dakota oil pipeline, has already completed construction up to the river that provides water to the Standing Rock Sioux tribe and announced on Tuesday it would soon begin drilling at the site.

The company said it would not halt construction, despite requests by federal agencies to delay the project as the US government reassesses permits and considers possible reroutes.

In a statement, Energy Transfer Partners said it was “mobilizing horizontal drilling equipment” in preparation for tunneling under Lake Oahe, a reservoir on the Missouri river by the protest camps and Native American reservation. The corporation said it would be ready to start crossing the water in two weeks.

The announcement came on a quiet election day at the encampments built by members of the Standing Rock Sioux nation and other indigenous people in opposition to the pipeline.

After a string of clashes and mass arrests, rumors spread among activists that the pipeline, government and tribal leaders had negotiated a 30-day moratorium on both construction and protest or religious ceremonies on the “front lines” of the conflict.

“I’m in shock. I’m speechless,” said Cheryl Angel, a Sicangu Lakota tribe member who has been at the Standing Rock camps since the spring. “It’s unconscionable and devastating. It’s almost as though they have no soul.”

The announcement presents the final phase of construction as a done deal, and will be seen as a clear illustration that the oil company is aggressively moving forward with the $3.7bn pipeline in defiance of Barack Obama and the thousands of demonstrators who are camped out at Standing Rock to fight the project.

The president said the US army corps of engineers was exploring ways to “reroute” around Native American lands, and said the government was “going to let it play out for several more weeks, and determine whether or not this can be resolved in a way that I think is properly attentive to the traditions of the first Americans”.

In September, the government said it would temporarily halt permits to dig on federal land near or under the Missouri river and requested that the company “voluntarily pause all construction activity within 20 miles east or west” of Lake Oahe.

Energy Transfer Partners ignored that request and continued construction, recently approaching within a few miles of the river, causing widespread anger and sadness at the Standing Rock camps, which have been opposing the pipeline since April.

Tuesday’s statement does not address the requests from the government for a delay. On the contrary, it suggests that the company is not giving consideration to alternative routes or Obama’s recent remarks.

“Dakota Access previously received a permit from the army corps with respect the tunneling activities under Lake Oahe, and Dakota Access has all other regulatory approvals and land rights to complete the crossing of the Missouri river at Lake Oahe,” the statement said.

The army corps did not respond to requests for comment.

Asked about Obama’s comments, pipeline spokeswoman Vicki Granado told the Guardian: “We are not aware that any consideration is being given to a reroute, and we remain confident we will receive our easement in a timely fashion.”

The company’s announcement comes as North Dakota regulators are moving ahead with a formal complaint against the corporation for failing to properly disclose findings of Native American artifacts along the construction route.

Angel said the pipeline construction plan was “environmentally irresponsible” and “illegal” considering the army corps has yet to approve final permits. Noting that the Missouri river provided drinking water to millions, she added: “I’m in tears, because I can’t believe [the company] would do this to a whole group of people who don’t have any say.”

This past Sunday, more than a hundred water protectors used boats to ferry across the Cannonball river and attempted to climb “Turtle Island” – a portion of army corps land where tribal members say there are 11 burial sites. Several tribal elders, including Darrel Killsinsight, implored everyone to return to the main camp, referencing the alleged 30-day agreement.

But representatives of the tribe never officially confirmed that any such agreement was in place, and Tuesday’s statement flies in the face of any hope for a moratorium.

Jan Hasselman, the attorney representing the Standing Rock Sioux in its permit litigation, said that the statement from Dakota Access was probably a response to an army corps spokesman telling Bloomberg that the company had agreed to slow construction. But, she added, Dakota Access does not have all the permits it needs to begin drilling, including the easement.

“Starting construction without permits would be beyond the pale, even for Dakota Access,” Hasselman told the Guardian. “It is deeply irresponsible to keep putting investors’ money into this route when both the President and Senator Tim Kaine are openly discussing rerouting away from Lake Oahe.”

The timing of the announcement on election day instantly raised suspicion – and anger – among the activists gathered at Standing Rock. Activists have expressed frustration with the US presidential race, noting that Democratic candidate Hillary Clinton has refused to take a position on the conflict and GOP candidate Donald Trump has close financial ties to the pipeline.

“With the election being so big, and North Dakota being so small, they think they can just sweep this under the rug,” said Danny Grassrope, a member of the Lower Brule Sioux Tribe. “I’m not really surprised. Snakes are sneaky, and this is a black snake. It blindsides everyone.”

He added: “A lot of people are going to get angry, and this is where we need to stay positive. We need prayers more than ever now.”

The protesters were also disappointed that Obama has not condemned the highly militarized police force in North Dakota, which has arrested more than 400 peopleand deployed Mace, Tasers, rubber bullets and army tanks to respond to demonstrations.

A UN group is also investigating claims of inhumane jail treatment and other human rights abuses by law enforcement.

“Are indigenous people so invaluable that now that Dakota Access is to the water, does it not matter to anyone that people are going to start laying down their lives?” asked Eryn Wise, a member of the Jicarilla Apache and Laguna Pueblo tribes.

“I think that people need to seriously question the integrity of the work produced by DAPL right now, because they’re rushing,” Wise added. “Is it safe when they’ve been rushing like this?”

Much has been made about President-elect Donald Trump’s plans to dismantle environmental regulations and streamline regulations that could lead to the construction of more pipelines. But there are a few other controversial energy issues that President Trump might ram through a Republican Congress, which would hand the oil and gas industry new areas for drilling that have long been off limits.

No other place has been more contentious, more fought over, than the Arctic National Wildlife Refuge (ANWR), a large swathe of territory in northeast Alaska, east of Prudhoe Bay where much of the state’s drilling is located. As its name suggests, the refuge is home to scenic mountains, rivers and lakes rich in wildlife and biodiversity. But it is also thought to hold large volumes of oil and gas reserves, and has been the subject of heated debate since the late 1970s over whether or not oil and gas companies should be allowed to drill. Republicans have long sought to open ANWR up for drilling, but Democrats have stymied them for decades.

But that deadlock could be broken with the unusually brazen President-elect, who is hoping to deregulate large sectors of the U.S. economy. And he has the allies in Congress to take on hugely controversial items. Alaska Dispatch News reports that the Alaskan congressional delegation, led by the powerful Senator Lisa Murkowski (R-AK), who chairs the Senate Energy and Natural Resources Committee, was shocked on election night (as was everyone else), and quickly thought to put ANWR on the table for President Trump’s agenda in his first 100 days. When asked about ANWR by a reporter on election night in Anchorage, Sen. Murkowksi voiced cautious optimism. "Well, as you know, we have been working to advance ANWR for decades now. And we need to have the support of the Congress," Murkowski said. "But if the numbers continue for us with the Senate and you have a president who has expressed support, I will be chairing the energy committee again, and I am going to look to push that early on," she added.

"I would suspect that the opening of ANWR actually has a fairly good chance (when) Republicans hold" the House of Representatives, the Senate and the White House, Bob Gillam, founder of McKinley Capital Management, told Alaska Dispatch News.

Opening up ANWR for drilling would fit perfectly into Trump’s plans to essentially drill everywhere in an effort to make the U.S. oil independent. Alaska’s Republican delegation sees only upside. "We might take people up north where we will discover that there's still a lot of oil up there if they just give us permission to go get it," Sen. Murkowski said on election night.

In another sign that Alaska’s oil industry could win big from a Trump administration, former Alaskan Governor Sarah Palin has been rumored to be a candidate for Interior Secretary. That is important because the Interior Department oversees the stewardship of federal lands, including offshore. Palin, as readers might remember, did more than anyone to popularize the slogan “Drill, Baby, Drill.” There is little doubt that she would mark a sea change in the management of public lands. First off the bat could be to auction off offshore tracts in the Arctic Ocean in her home state, and to scrap regulations standing in the way of drillers. Sen. Murkowski has long criticized President Obama’s Interior Department for over regulation, which she says has held back drilling in the Arctic.

The Obama administration is currently finishing up its five-year plan for offshore drilling for the years 2017 through 2022, but the draft document has not included plans to allow drilling in the Eastern Gulf of Mexico, the Pacific Ocean, or the Atlantic Ocean – areas that have long been off limits. Environmental groups have pressed President Obama to also withdraw the Arctic. Presumably, the Trump administration would be willing to open up drilling in all of these areas.

Allowing drilling in remote corners of the U.S. where drilling costs are high is one thing. But with oil prices in the mid-$40s, drilling in any of these areas is probably not profitable, so there is little chance that there will be a drilling rush even if new lands, including ANWR, are opened up. Royal Dutch Shell indefinitely canceled plans to drill in the Arctic in 2015, after spending billions of dollars and years to drill an exploration well in the Chukchi Sea. Shell did not find economically recoverable oil reserves, and wrote down its Arctic program, essentially killing off Arctic exploration for years to come.

On the other hand, oil prices won’t always be this low. Deregulation could also lower costs for the industry. And the industry has never had a shot at ANWR, where drilling could be much less costly than offshore. Either way, Donald Trump and the Republican Congress have the option of removing all barriers standing in the way of drillers, so we could find out if the industry is interested in drilling in ANWR and new offshore areas around the country.

U.S. President Barack Obama on Tuesday permanently banned new oil and gas drilling in federal waters in the Atlantic and Arctic Oceans, in one of his last environmental pushes before he leaves office next month.

In protecting the waters, Obama used a 1950s-era law called the Outer Continental Shelf Act that allows presidents to limit areas from mineral leasing and drilling. Environmental groups said Obama's use of the law meant the incoming administration of President-elect Donald Trump could not simply reverse the action but would have to fight it in the courts.

The ban affects federal waters off Alaska in the Chukchi Sea and most of the Beaufort Sea and in the Atlantic from New England to Chesapeake Bay.

In one of the final and most dramatic environmental actions of Barack Obama’s time in office, the president banned new oil and gas drilling in nearly all US waters in the Arctic Ocean.

On December 20, the president used the authority granted by a 1953 law to remove the Chukchi and Beaufort Seas from the federal Arctic waters that are considered available for lease. Combined, the two seas make up 98% of the US Arctic water territory — a total area of more than 100 million acres.

Obama’s action, which he announced in conjunction with Canadian Prime Minister Justin Trudeau, was applauded by environmental groups that have been fighting Arctic drilling practices for years. Environmentalists say the Arctic Outer Continental Shelf's underwater canyons provide essential habitats for sea animals, many of which are facing endangerment due to the extreme warming of Arctic waters. Drilling and excavation on the sea floor could lead to even more species extinction — not to mention the impact the extracted oil would have on the earth's climate once it gets burned.

The law Obama used as the basis for his action is called the Outer Continental Shelf Lands Act, and was passed under President Eisenhower. The act gave the president the ability to sell leases to oil companies who want the right to tap into oil reserves on the Outer Continental Shelf, the underwater land around the US.

But according to one clause in the law, the president also has the ability “withdraw from disposition any of the unleased lands.” Obama took that power seriously yesterday. With almost all the unleased lands now considered protected (or unavailable for drilling), no new leases will be granted. (Oil companies who currently have leases will be able to stay, unaffected.)

Because the 1953 act didn’t include any provision for reinstating Outer Continental Shelf lands for drilling after they've been withdrawn, the White House has defined the action as permanent.

That claim of irreversibility seems specifically aimed at protecting Arctic waters from Donald Trump, who has promised to open more federal land to drilling and resource extraction. If the President-elect does try to undo Obama’s action once he takes office, he will likely face a court battle to determine whether it's legal to reinstate federal land that a former president has previously put under protection.

Oil industry advocates have already voiced opposition to the action, suggesting that Donald Trump will find a way to reverse it.

“Blocking offshore exploration weakens our national security, destroys good-paying jobs, and could make energy less affordable for consumers,” Erik Milito, American Petroleum Institute’s Upstream Director, said in a statement.

But not all oil producers seem shaken by the change.

“It is important to realize that significant development or production from these deep-water areas will not happen in the current pricing environment, it will take much higher and sustainable prices,” Avi Mirman, CEO of Lilis Energy Inc, a Denver-based oil and gas exploration and production company, tells Business Insider.

Mirman suggests that Obama's ban is largely symbolic, since Arctic exploration is such a risky, costly endeavor, and US shale now offers companies cheaper extraction options. (Plus, oil production in the Arctic makes up just 0.1% of the country’s oil production, according to the Washington Post.) Oil giant Shell illustrated Mirman’s point in 2015, when it abandoned its drilling operations after spending over $7 billion hunting for oil in the Alaskan Arctic.

“Also, the infrastructure needed for such project is extremely expensive and will take many years to build given the climate and available times to work in those areas,” Mirman explains, suggesting that exploration and production companies like his will focus instead on more cost-efficient projects.

Companies who still wish to pursue Arctic drilling, however, could do so in Alaska’s state waters — the same 1953 law gives states control over the underwater area 3 miles offshore of their coastlines. After that, it’s federal territory.

Although the Arctic drilling ban represents a major milestone for environmental groups, many advocates immediately started using the action as an example of protections that could be extended to other parts of the Outer Continental Shelf.

“We must afford the same protections to the people of the Gulf of Mexico, which has become an energy sacrifice zone,” Friends of the Earth Climate Campaigner Marissa Knodel said in a statement.

Greenpeace US spokesperson Mary Sweeters echoed that sentiment, suggesting that the president’s current five-year energy plan puts residents of the Gulf Coast region at risk of damage from oil spills.

“The job will not be done until no new leases are granted anywhere in US waters,” she said.

It is up there in part because OPEC threw in the towel and agreed to production limits. Unfortunately for OPEC, those limits don’t apply to US and Canadian shale producers. And the history of OPEC is that they all cheat like crazy, anyway.

There will be no end to oil production

I think it is entirely possible that we will see oil prices climb somewhat further by mid-year, possibly approaching $60, and then pull back as capped US production comes back online.

I also think that this year, we’ll start to see a new pattern: Production could keep rising even as prices fall. Conventional wisdom says that producers stop pumping at some point when it becomes unprofitable, but I think that is about to change.

New technology will lead to greater production and higher profits

If you are an oil producer—or really, any commodity producer—two things can improve your profit margin: higher selling prices for the resource you produce or lower production costs. Some combination of both works as well.

Now, selling prices are mostly outside the producer’s control, though adept hedging can help. Cost reduction is, therefore, the place to concentrate your attention. Back in 2015, I wrote about new drilling techniques and other technology that promised to bring oil and gas production costs significantly lower.

Now, in the last few weeks, people in the business have told me these technologies are moving rapidly toward deployment. They foresee considerably lower drilling and production costs by the end of this year.

I had a confidential briefing recently about some new energy production processes that are coming online in the oil patch. Let me just say that production from an oil well drilled with these new techniques is getting ready to increase substantially.

In some cases, the amount of oil produced per dollar spent on drilling is going to more than double. There are significant chunks of the petroleum-producing parts of the United States where $40 oil will not be a barrier to drilling and new production.

Eventually—in a few years—these techniques will begin to show up in wells around the world, and there will be an explosion of oil. Even as many oilfields dry up, there will be new fields developed from previously unprofitable sources.

This will have massive economic and geopolitical implications

This technology trend means that the current oil price range may well break lower—perhaps this year, but certainly within this decade—without energy companies losing profits.

Not every company will reap the rewards equally, of course; but the industry as a whole is excited. Energy exploration and production is quickly becoming a technology-driven industry with the US as world leader.

If Trump permits construction of more pipelines and natural gas export terminals, we could see North American exports rise considerably in the next few years.

It’s now clear to nearly everyone that U.S. President Trump intends to seek warmer U.S. relations with Russia, while putting China and Iran relations in the deep freezer. Trump has made no secret of this major shift in policy. It’s also clear that he sees China, very much like Obama, as a major threat to U.S. global leadership.

Trump has often stated that he thought the Obama sanctions on Russia was catastrophic for the U.S., resulting in only pushing Russia into an alliance with China, a fear that many noted policy experts have echoed. For Russian energy companies, it means the doors are cracking open again for business.

Russia is again a hot topic on nearly every news site. And the topic has become even hotter with the U.S. election of a Putin-friendly president, who seems ready to share responsibilities with Russia for organizing the world’s response to global terrorism.

In a world where Trump seems to have a strangle-hold on the daily news, his energy friendly policy ideas are well known: reducing regulations, opening restricted government land for leasing, rejecting climate change, and bringing back to life rejected pipelines such as Keystone XL.

But hardly anyone expected the announcement that rocked the entire U.S. establishment, the nomination of Exxon’s CEO, Tillerson as Secretary of State in the new Administration. Even veteran political analysts were caught off guard, unaware that for the first time an oil industry leader was being considered to take the helm at State. Further upsetting many Trump opponents is Tillerson’s long and successful relationship in Russia with President Putin.

Suddenly the world is full of angry politicians, some who hardly know Tillerson, others who have happily received donations from his company, now castigating this life long Texas Republican as a Putin-crony, despite the fact that his relationship with the Russian President was often stormy and contentious.

But for the oil industry Tillerson’s appointment went beyond their wildest dreams. With this single act, Trump has established that his Administration may be one of the most oil industry friendly in history.

For over a decade, Exxon has had large investments in Russia, starting out with the development of oil and gas reserves in the far Eastern region of on Russian Pacific Coast, in the frozen wasteland of Sakhalin Island. In partnership with Russian-controlled companies giant oil companies, the project started off well enough, with Exxon pioneering the discovery and development, with a ready and interested buyer in Japan close at hand, offering the second largest energy market in Asia. Solidifying the deal, two of Japan’s major oil companies became partners in the venture.

But soon thereafter, the Kremlin passed new regulations that restricted foreign companies from owning a controlling interest in Russian energy ventures. After months of painful negotiations, Exxon was forced to sell down its controlling stake and become a minority owner to its former junior partners, Gazprom and Rosneft.

Although forced to comply with the new rules, what Exxon had demonstrated was that it could open up the Russian markets to high tech western companies, and make billions in the process. Almost all the other western oil giants were soon to follow suit, including Shell, Chevron, Conoco, BP, Eni, and Total, bringing the finance and technology that Russia so badly needed for the development of large scale projects.

Consider that Exxon, with its deep pockets and more than twenty years of experience in the Alaskan Arctic, is the most technologically advanced oil company in the world. The company brought much needed technology to Russia, where it partnered with the Russian giant oil company, Rosneft, for Arctic drilling.

In their very first effort on the Russian Arctic shelf, where Exxon is believed to have invested around $1 billion, the companies struck oil in a reserve estimated to hold some 750 million barrels of oil, with a market value of some $40 billion, at today’s oil prices.

Consider the significance of that project to Exxon, with Russia, as the largest country in the world, laying claim to the largest section of the Arctic, a region estimated to hold some 35 percent of the world’s remaining energy reserves. With Exxon now emerging as the key energy developer of the Russian Arctic shelf, the company saw the potential for leap frogging its competitors in becoming the chief developer of Arctic energy sources.

Unfortunately for Exxon, the project had to be abandoned because of the onset of sanctions on Russia. It’s well known that Tillerson, who publicly objected to the sanctions, made his complaints directly to the Obama administration.

In his recent Senate confirmation, Tillerson voiced harsh criticisms of Russia, that some observers felt were only newly invented for the sole purposes of easing his confirmation. He took particular aim at the Russian take-over of Crimea. This, despite the fact that Exxon and Rosneft have plans to exploit development of the Black Sea’s vast offshore energy reserves, something that could never have been possible without a Russian Crimea that enabled Russia to lay claims to large territorial rights on the Black Sea.

He also responded that he would not attempt to ease U.S. sanctions against Russia. Yet, observers are also suspicious that he may never have to do so since the sanctions are due to expire in March. There is little expectation of sanctions renewal by the Trump Administration.

Instead, a major part of the Trump Administration foreign policy will be to normalize relations with Russia, while advancing oil industry interests. Tillerson appointment to the post of Secretary of State is seen by many as a key part of that strategy.

Conclusion

At base, a major part of the job of the State Department has always been as advance guard for U.S. business. In that sense, a businessman as Secretary of State makes some sense.

It also could make sense to have an oil industry leader at the helm when we consider that much of the geopolitics of the world revolve around oil, particularly in the hottest conflict areas of Eurasia, where the U.S. and NATO have been embroiled in war for the past generation.

As to his confirmation, it seems unlikely that the U.S. Congress, an institution much beholden to corporate donors, would reject the nomination of the current leader of one of the world’s richest and most powerful industries.

The fact that U.S. Senator Corker has announced that Tillerson’s appointment will come before the full Senate may be taken as a signal that the Senate means to confirm the oil executive even if the Senate Foreign Relations Committee votes against confirmation.

His confirmation could be seen as a Trump-sponsored “get out of jail card” for Putin. Already the EU seemed to be reading the writing on the wall. Suddenly Gazprom proposed pipelines that had been stalled for more than two years are being approved in Europe.

At a time of rising oil prices, Tillerson’s appointment will almost certainly spark renewed investor interest in Russian energy assets, particularly Rosneft, one of the most undervalued oil industry giant in the world. How undervalued? For comparison, consider the fact that although Rosneft’s reserves are greater than Exxon's, Exxon’s market value is seven-fold greater than Rosneft’s.

At the same time, as a state controlled company, Rosneft provides several advantages for Exxon, a company that has serious problems in replacing its reserves. These include Rosneft’s privileged, and exclusive right to reserves in the Arctic. Only Gazprom, the other state controlled energy giant, has similar exclusive rights, and is also likely to benefit from the Tillerson appointment.

HANOI (Reuters) - Vietnam on Friday said other countries should respect its legitimate right to drill for oil in its waters amid growing tension with China over energy development in the South China Sea.

The drilling began in mid-June in Vietnam's Block 136/3, which is licensed to Vietnam's state oil firm, Spain's Repsol and Mubadala Development Co of the United Arab Emirates.

The block lies inside the U-shaped "nine-dash line" that marks the vast area that China claims in the sea and overlaps what it says are its own oil concessions.

China on Tuesday urged a halt to the drilling.

"Vietnam's petroleum-related activities take place in the sea entirely under the sovereignty and jurisdiction of Vietnam established in accordance with international law," Vietnamese Foreign Ministry spokeswoman Le Thi Thu Hang said in a statement sent to Reuters.

"Vietnam proposes all concerned parties to respect the legitimate rights and interests of Vietnam."

This week, the BBC reported that Vietnam had halted drilling there after Chinese threats, but there was no independent confirmation and neither Vietnamese officials nor Repsol made any comment on the report.

Thomson Reuters data showed the drilling ship Deepsea Metro I was in the same position on Friday as it had been since drilling began on the block in the middle of June.

China claims most of the energy-rich South China Sea through which about $5 trillion in ship-borne trade passes every year. Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

Oklahoma is being pummeled by earthquakes, a phenomenon scientists have strongly tied to wastewater injection and the practice of fracking.

A new study highlights just how strong that connection is.

According to the US Geological Survey, the earthquake threat level in some parts of the state may now be approaching the level for some parts of California.

Over the course of a few days in August, Oklahoma was pummeled by seven earthquakes.

The wave started on a Tuesday night, when five quakes struck the central part of the state in less than 28 hours. The shaking continued extended into the early hours of Thursday as two more hit.

Although none of those quakes was severe enough to cause significant damage, scientists are increasingly concerned about their cause. Rather than emanating from natural tectonic shifts deep inside the Earth, these temblors appear to be the result of human activity.

The authors of the latest paper, published this week in the journal Science, found that they could use the depth of the wastewater injection sites to roughly predict how big the earthquake they caused would be.

In other words, the deeper the injection site, the stronger the quake.

The researchers were confident enough in their assertions to make a recommendation:"Reducing the depth of injections could significantly reduce the likelihood of larger, damaging earthquakes," Thomas Gernon, an associate professor of earth science at the University of Southampton, wrote in an article for The Conversation.

Oklahoma's earthquake threat level is now predicted to be roughly the same as California

Until recently, earthquakes in Oklahoma were few and far between. In 2010, the state experienced just 41 tremors. By comparison, Southern California has about 10,000 earthquakes each year.

But that disparity may be shrinking.

According to a forecast from the US Geological Survey, the risk of a significant and damaging earthquake in some parts of Oklahoma is now roughly the same as the risk in parts of California.

"The chance of having Modified Mercalli Intensity VI or greater (damaging earthquake shaking) is 5–12% per year in north-central Oklahoma and southern Kansas, similar to the chance of damage caused by natural earthquakes at sites in parts of California," the forecast reads.

Over the past few years, Oklahoma has weathered hundreds of significant quakes— more than 900 in 2015 alone, according to The Conversation — as have parts of several other Midwestern states. The region is replete with eons-old fault lines that went quiet long ago, but wastewater operations appear to be re-awakening some of those faults.